SHANGHAI, Feb. 5 (SMM) – On Monday, Jinchuan Group raised ex-works prices for refined nickel to RMB 130,000/mt (plate), and RMB 131,200/mt (small in barrel), up RMB 2,000/mt.  In the Shanghai nickel market, mainstream traded prices of Jinchuan nickel were in the RMB 130,900-131,100/mt, and RMB 129,900-130,100/mt for Russian nickel. The arbitrage opportunity in domestic electronic markets briefly helped improve trading among traders. After Jinchuan Group increased prices, traders lowered quotations slightly, and prices of Jinchuan nickel were down between RMB 130,800-131,000/mt, and RMB 129,800-130,000/mt for Russian nickel. Transactions dropped significantly with little arbitrage opportunity in electronic markets.

According to a recent SMM survey of price movements this week, 60% market players expect LME nickel prices to lurch higher, and may reach USD 18,700-18,900/mt. Although the US January non-farm payrolls were slightly lower than market expectations, and the jobless data came in at higher than expected, those optimists believe that the data for November and December was revised up. Meanwhile, the monthly average non-farm payrolls in 2012 were also revised up from the preliminary data, suggesting that the US labor market is recovering. Besides, the upbeat economic news from the eurozone and China also helped boost the market.  A series of economic data to be released this week is also expected to be positive. In this context, these market players expect nickel prices to extend gains amid the favorable economic news this week.

Approximately 20% of market players understand that LME nickel prices will hover in the USD 18,300-18,700/mt range after recent rallies, to gain more rising momentum.  The neutralists note that no major changes will come out this week from interest rate meetings in Australia, Britain and Europe. The lack of news will leave nickel prices unchanged in the existing price band.

The rest of market players are pessimistic towards the outlook, believing that LME nickel prices may slid to USD 18,300/mt. The latest figures show that inventories of #300 stainless steel were 136,119 mt in Wuxi, up 3.71% MoM, a reflection of weak downstream demand. In overseas markets, stainless steel demand in the eurozone is not expected to recover significantly in 1Q 2013 along with heavy debt burdens and the pessimistic economic outlook towards the 2013 in the region. Demand from construction, automobile and home appliance industries sector will remain soft, and only consumption from energy and processing sectors will improve slightly. In the US, downstream demand is also sluggish, and local stainless steel dealers said stainless steel demand was tepid in January, with trading volumes lower than the normal level. Weak consumption has brought LME nickel inventories up to 150,900 mt, with no signs of declines in growth. Hence, they believe that nickel prices will fall from earlier gains.